This morning, America’s Cheapest Family, the Economides (real name!) were supposed to be on the Today Show again. As I’ve been thinking about how we earn and spend money, I’ve been poking around a bit on their website and checking out their advice, because I think it highlights a few money assumptions that many of us hold… but could use some rethinking.
According to their website, today’s segment showed how they could buy two outfits apiece for under $50. They actually spent far less than that. Let’s use a ball-park figure of $20 for 5 items, or $4 each. Their general rule, they note, is to survey what they need, and then visit a hierarchy of stores. First comes thrift stores. Then comes consignment stores, then comes discount stores (like Wal-Mart or Target).
That’s one approach. Here’s how I recently bought new 5T outfits for Jasper. I went to OldNavy.com. I selected 5 shirts and 5 pairs of pants. I paid whatever they cost (they had a sale, so it was reasonable, about $85 for 10 items) and got them delivered.
Which is cheaper? I think the answer is more complicated than at first glance. I clearly spent more. Five items at my burn rate would be $42.50, or a bit more than $8 apiece. On the other hand, my shopping took less than 20 minutes. How much time does it take to drive to a thrift store with a shopping list, hunt around and see they have some 5T stuff, but the only white shirt is stained, so you head to the consignment store next? If you actually have to hit 3 stores (with kids in tow?) we could be talking a whole afternoon. So this is the key question: What is the opportunity cost of your time? Can I make the extra $4 and change per item ($22.50 total) in the time I’m not driving around? I know that I can. Which means that my quick shopping was cheaper than an afternoon spent shopping, even if the latter means less physical cash straight out of my wallet.
Time has an opportunity cost. But a lot of people never think about that. There may be other issues — I actually prefer working to shopping, whereas many people lean the other way — but this is about allocating resources according to preferences. It’s not about being cheaper.
We also have certain assumptions about how family economics are supposed to work. Over at the Today Show website, the Economides take a question from a viewer, whose husband’s job had been eliminated the year before. He now works for a temp service at less than half the pay with no benefits. The viewer wanted advice on covering expenses for her three boys, ages 12, 13 and 17.
The Economides (correctly) said that their biggest issue was health insurance. They listed a few places where a family can get a temporary policy. And they gave this advice: “Encourage your husband to keep looking for a job that will at least provide major medical coverage.”
Fair enough. But why is he the only one who has to do this? Why can’t the mother look for a job with major medical coverage? The explanation of their situation is vague enough that perhaps the Today Show, in the interest of saving space, didn’t mention the mother’s job. But somehow there was space for describing the odd jobs the boys were doing to earn cash. Why isn’t this suggested for a woman whose children are not only in school, but old enough to look after themselves (or each other) in the afternoon if she found a full-time job with benefits? It might not work. If she is out of the workforce, re-entering isn’t easy. But she could try the temp service too to start. And if it did work long term for her to get a full time job, the economic impact on this family would be far greater than asking for a waiver for SAT registration fees.
I imagine they didn’t mention this option because it opens a can of worms on how families choose to split their responsibilities. But tough times call for rethinking lots of things — including who can be a breadwinner.
Yes! Thank you! Not that long ago, I ventured into the “grocery game” arena, where you match coupons with sales and can get items for next to nothing. While I don’t mind the time spent clipping coupons from the Sunday paper, I despise driving from store to store to actually buy the items. I live in the DC area and traffic is awful even on the weekends, so sometimes a quick trip to the grocery store is not quick at all. My grocery game experiment did not last long. I’m also trying to plan a wedding on a budget, and am torn between driving 20 miles to get an awesome deal on decorations from a Craigslist seller, versus just ordering it new from a site online and not having to go anywhere. I would much rather order something online and have to wait a few days for it to arrive at my doorstep than to have to venture out to stores, find parking spaces, and so on to find good deals. I can definitely see the whole money saved vs. time spent argument.
@Melissa- I always try to do this calculation in my head, on time spent vs. money saved. I can see the connection more directly than many people because I’m always paid by the project, meaning that an extra article gives a very clear value to that extra hour worked on the margins. If one has a set salary, this is less clear. On the other hand, investing in one’s career often does pay off in the long term in higher wages, so we’re all facing the same calculation even if it’s a bit more muddy. I may do a post soon on how we should all set our own minimum wage — the savings per hour below which we will not go in pursuit of frugality.
You’re absolutely right about time vs. money. We buy most of our kids’ clothes online, and my husband buys a lot of his stuff online, too. Unfortunately, I’ve not had a lot of success buying clothes for me, particularly pants, online. So I trudge around the mall trying things on. Even if I think I have the exact same pants in my closet, chances are the manufacturer has changed them in the name of staying current with fashion. The only time saver I’ve found there is to just buy multiple colors in the same style when I find one that works.
When we’re both working, it is 100% clear to me that it is worth spending more money to save some time. But when I was laid off, I was willing to spend more time to save some money.
I love your comment on a minimum wage. My contract work is per paper, so like you, without a project, work doesn’t get done. Lately, work has been slow (university cutbacks?) so I’ve spent time doing taxes and exercising that I normally would have spent working.
Where we live, grocery delivery (other than bulk from Amazon) is not a possibility and we drink a lot of milk so I stop for milk-and-bananas 2-3 times/week. I try to stop at the store with the most OTHER sale items I need and try to save $10 or 50%, depending on the size of the bill.
I definitely agree that BOTH spouses should be looking for work with family medical insurance. I actually advised a friend in this situation that SHE should take the low-paid night shift job with medical insurance so that her husband can continue to focus on his field and qualify for unemployment.
@Twin mom: I’ve been hearing of a few families lately that really have taken this idea to heart that both parents need to look for work. Even if they’ve been a one-income family before. That worked for a while, and now it isn’t working, and so if a parent who hasn’t been in the workforce has an opportunity, that person should seize it and take some of the pressure off the previous breadwinner to find the first thing available.
Short-term, having both parents working is the least bad option. Long-term, public schools with 160 day school years and 40 students/class with parents who don’t have time to help with academics because they’re both working low wage jobs and doing all the housework will hurt our society. It’s very depressing.